WASHINGTON -- A senior U.S. Energy Department official on Wednesday disputed reports that the Obama administration has sought Mongolian support for construction of a storage site for international spent nuclear fuel in the Central Asian nation.

The assertion -- made by a high-ranking official who asked not to be named in addressing a diplomatically sensitive issue -- directly countered remarks offered last spring by a veteran State Department official who leads U.S. nuclear trade pact negotiations.

The diplomat, Richard Stratford, told a Washington audience in March that Energy Department leaders had made initial contacts with their counterparts in Ulaanbaatar about potential cooperation on a range of nuclear fuel services that Mongolia would like to develop for international buyers.

Among the possible features of a joint project, Stratford said, could be the creation of a repository for U.S.-origin fuel that has been used by Washington's partners in the region, potentially including Japan, South Korea and Taiwan.

If brought to fruition, the proposal would be "a very positive step forward," he said at the time, because no nation around the globe thus far has successfully built a long-term storage facility for dangerous nuclear waste.

The Obama administration in 2009 shuttered plans for a U.S. storage site at Yucca Mountain in Nevada -- which would have been the world's only permanent repository -- after prolonged debate over potential environmental and health hazards.

In an interview this week with Global Security Newswire, the high-level Energy Department official said that discussions have focused on an array of potential nuclear energy market roles for Mongolia, from mining its substantial uranium reserves to fabricating fuel and more.

However, the unofficial talks have not broached the idea of Mongolia becoming a recipient of foreign-origin spent fuel, the senior figure said.

"I never thought about U.S. spent fuel. Never," the Energy official said. "I never even thought about it, much less discussed it."

The Obama administration generally supports the idea of creating international operations for waste storage and other fuel-cycle functions that might help stem global nuclear proliferation, but "what the Mongolian government and the Mongolian people end up deciding they want to do is completely their decision and I would not dream of imposing our views on that," the senior official said.

"There's no discussion of an international spent-fuel repository," added a second Energy Department official who participated in the same interview. "What has been included as part of the comprehensive fuel services discussions are potential long-term storage of Mongolian-origin used fuel that has Mongolian uranium [in it]."

Adding Value

An evolving concept of nuclear fuel "leasing" would have the Mongolians build on their existing uranium ore resources to ultimately provide reactor-ready fuel to foreign nations and, additionally, stand ready to take back used uranium fuel rods once they are depleted, according to reports.

The idea, said the more junior Energy official, is that Mongolia could "potentially add long-term storage as part of the value of that uranium resource to potential buyers."

Even if foreign-origin spent fuel cannot be stored in Mongolia, the nation's talks with its international partners might yet allow for U.S., Japanese or other companies to build facilities in the Central Asian nation to produce Mongolian fuel for sale abroad, which could later be returned to Ulaanbaatar for storage after it is used.

The Mongolian Embassy in Washington on Thursday declined comment.

The senior official chalked up the seeming disconnect between Energy and State to a simple misunderstanding, noting that the U.S. Embassy in Mongolia also initially denied Stratford's assertions about a potential international repository in an April statement.

The Mongolian foreign minister went a step further the following month, denying that talks with the United States and Japan had touched on the disposition of atomic waste of any national origin, according to a report by China's Xinhua News Agency.

As a developing nation, Mongolia might derive substantial economic benefit if it agreed to accept foreign spent fuel. However, the idea has become a political lightning rod, with the opposition Green Party charging that a waste facility could become an environmental and safety nightmare.

A number of quiet steps toward international collaboration, though, have already taken place.

Deputy Energy Secretary Daniel Poneman in September 2010 signed a memorandum of understanding with Mongolian Foreign Minister Gombojav Zandanshatar, pledging future cooperation on civil nuclear power. Japan was also a party to the draft agreement, which has not been released but reportedly included a passage referring to Mongolia as a future destination for spent fuel.

In Ulaanbaatar to ink the document, Poneman is said to have participated in a long discussion about Mongolia's nuclear trade aspirations with Undraa Agvaanluvsan, an ambassador-at-large at the nation's Foreign Affairs and Trade Ministry.

In that conversation, the notion of Mongolia potentially accepting foreign-origin spent fuel "didn't come up," and "Dick Stratford wasn't there," the senior Energy Department official said in the interview.

The official acknowledged, though, that in the course of these bilateral discussions, the U.S. side raised a number of ideas with the Mongolians, but some were quickly dismissed.

"We were brainstorming these ideas, but they were just ideas that we were brainstorming," the Energy official said. "And it was not anything that, frankly, got beyond that."

A State Department spokeswoman this week directed a reporter to the Energy Department for any comment.

Changing Landscape

"I happen to think the Mongolians are just teasing a very excitable bureaucracy, until the U.S. is too committed to a '123' agreement to back out even without the waste dump," nuclear expert Jeffrey Lewis, referring to the possibility of a bilateral nuclear trade pact, wrote in an April blog post.

"Certain people at the Department of Energy do believe Mongolia will agree to host a waste repository and are having relevant discussions," he stated in another post the following month. Lewis directs the East Asia Nonproliferation Program at the James Martin Center for Nonproliferation Studies.

Mongolian officials traveled to Washington for Energy Department meetings in February and again in August, U.S. government sources confirmed. Just prior to arriving in Washington for the August meetings, a group of working-level Mongolian officials visited the Idaho National Laboratory, where the Energy Department maintains wet and dry spent-fuel storage facilities.

"The discussions began a year ago and the whole scene looked a little bit different from [how] it looks now," the senior U.S. Energy official noted.

The disaster at the Fukushima Daiichi nuclear power facility in Japan, triggered March 11 by a major earthquake and tsunami, heightened concern about the safety of civil nuclear power facilities worldwide.

The crisis in Japan was mounting just as word began to leak in the news media that Ulaanbaatar was in the midst of closed-door discussions about jumping headlong into the nuclear energy market, a prospect that took many Mongolians by surprise. Revelations that the nation might construct a storage site somewhere in its expansive territory for foreign nuclear fuel further stoked public anxiety there.

In July, Kyodo News reported that the head of Toshiba -- the Japanese parent company to U.S. nuclear energy firm Westinghouse -- had written to Poneman to voice his company's continued support for the largely secret "Comprehensive Fuel Supply" or "CFS" effort in Mongolia, despite industry setbacks posed by the Fukushima disaster.

"We must recognize that the CFS project has now been publicized around the world," Norio Sasaki, Toshiba's president and chief executive officer, wrote in the letter, obtained by GSN. "As anti-CFS opposition can be anticipated, it is essential for the parties to the project to promote closer coordination in order to secure continued progress."

This disclosure and others prompted some in the public to "doubt the integrity of the Mongolian state," Dangaasuren Enkhbat, a Green Party member of parliament, said earlier this month at a government meeting on the matter.

"I think these external talks were no mere talks," he said. "In order to stop these talks, the people who participated in these external talks must be called to responsibility."

"Mongolia is not an awfully democratic state," said one U.S. expert who asked not to be named, citing controversy over the issue. "The ways in which they are engaging in this [discussion] shows how they are not fully democratic."

Growing political outcry and public protests forced the Mongolian president, Tsakhia Elbegdorj, to address in greater detail exactly what Ulaanbaatar was discussing with foreign capitals.

On Sept. 9 he issued a decree prohibiting formal talks about "cooperation on nuclear disposal with any country or international organization," unless such negotiations are authorized by the country's national security council, Kyodo News reported.

Speaking at the government meeting four days later, Elbegdorj said the new presidential order "clearly" dictates that public officials "refrain from participation on behalf of Mongolia in any talks or negotiations held under pressure of a foreign country."

Several issue experts interpreted his released remarks as a signal that Ulaanbaatar was effectively ruling out -- at least for now -- the creation of a repository for foreign spent fuel, regardless of whether the option had been earlier left open in private discussions with his U.S. or Japanese interlocutors.

In Mongolia, there is a search for "political cover and some amount of political consensus" on the issue, Mark Hibbs, a Berlin-based senior associate at the Carnegie Endowment's Nuclear Policy Program, said in an interview.

Limits on Mongolia's Nuclear Activities?

Meanwhile, it remains uncertain whether Mongolian leaders plan to develop a capability to enrich uranium or reprocess plutonium as part of their fuel-services menu. These capabilities can be useful for either civil atomic energy needs or for the development of nuclear weapons.

"I've heard zero interest expressed by any Mongolian in any fuel-cycle activity like enrichment or reprocessing," the senior Energy official said on Wednesday.

By the same token, though, the official could not offer assurances that Mongolia has ruled out the notion of enriching uranium or reprocessing plutonium on its own soil, as its capabilities to handle nuclear materials develop.

"Unless I were with them 24 hours a day, I have never heard them say a thing about it. I've never heard anything about it," the Obama administration official said. "But I don't know what anybody has said to third parties."

A bipartisan bill pending in the House would potentially make it more difficult for the White House to gain congressional approval for any pending nuclear cooperation agreement unless the trading partner has, among other things, relinquished a right to enrich or reprocess nuclear fuel on its territory.

The Obama administration included this so-called "gold standard" provision in a 2009 nuclear trade agreement with the United Arab Emirates, but has not yet said publicly whether or how it might apply the policy to other nations.

A so-called "123" agreement -- a type of trade accord governed by the 1954 Atomic Energy Act -- would be required before Washington could assist Mongolia with nuclear technologies or know-how, even if U.S.-fabricated fuel never enters that nation for storage.

Depending on the level of U.S. assistance permitted by a trade pact, Washington could conceivably exert a great amount of leverage over how Mongolia proceeds in entering the nuclear energy market.

Mongolian-origin fuel could actually become regarded as U.S.-origin material "if it is enriched or fabricated into fuel on U.S. soil," said Edwin Lyman, a senior scientist in the Global Security program at the Union of Concerned Scientists. "Another way it could occur is if the fuel is irradiated in a reactor that has used any U.S. technologies or equipment."

That designation could allow Washington a so-called "right of return" of its atomic materials or equipment if it determines that Ulaanbaatar has exceeded its rights under any future nuclear trade pact -- for example, by opting to domestically enrich or reprocess nuclear fuel contrary to the accord.

Leading up to possible negotiations on a nuclear trade agreement with Mongolia, Hibbs said a future pact could encounter some political opposition in Washington if Ulaanbaatar insists on keeping its enrichment and reprocessing options open.

"Some people in Washington have been a little apprehensive about whether Mongolia would want to enrich uranium or reprocess spent fuel, especially if the U.S. at some point agreed to support a multilateral fuel-cycle project in that country," he told GSN.

The senior Energy official would not speculate about how the Obama administration would react if Mongolia at some point refuses to renounce this type of nuclear processing, noting that the Asian nation has a long way to go before its atomic energy plans solidify.

"The U.S. holds all the cards really," Lyman said. "A '123' agreement with Mongolia should be seen as a privilege to Mongolia and not something in which they can dictate all the terms."

Calling nuclear trade pacts "one of the most potent tools the U.S. has" in helping restrict global proliferation, he added, "The administration should not lose sight of the original goal, which is to stop the spread of fuel-cycle facilities to countries that don't have them."

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